Income Tax Appellate Tribunal - Mumbai
Internet And Mobile Association Of ... vs Assessee on 6 May, 2014
आयकर अपीलीय अिधकरण, आई' आई खंडपीठ मुंबई अिधकरण 'आई INCOME TAX APPELLATE TRIBUNAL MUMBAI - 'I' BENCH MUMBAI सव[ौी एच.एल एच एल.कारवा एल कारवा, कारवा अÚय¢ / एवं राजेÛि, ि लेखा सदःय Before S/Sh. H.L.Karwa,President & Rajendra,Accountant Member आयकर अपील सं/.ITA No. 1212/Mum/2012, िनधा[रण वष[/ Assessment Year 2009-10 Internate and Mobile Association of D.I.T.(E) India, 406, 4th Floor, Money Terrace, Vs. Mumbai.
167 Dr.A.B.road,
Mumbai-400018
PAN: AAAAI1013Q
(अपीलाथȸ/ Appellant) (ू×यथȸ/ Respondent)
अपीलाथȸ ओर से/ Appellant by : Shri B.V.Jhaveri
ू×यथȸ कȧ ओर से/Respondent by : Shri Surinder Jit Singh
सुनवाई कȧ तारȣख/ Date of Hearing : 06-05-2014
घोषणा कȧ तारȣख / Date of Pronouncement : 28- 05- 2014
आयकर अ िधिनयम,
िधिनयम 1961 कȧ धारा ( 1 ) 254 के अÛतग[ त आ दे श
Order u/s.254(1)of the Income-tax Act,1961(Act)
Per Rajendra,A.M.लेखा सदःय,
सदःय,राजेÛि के अनुसार:
ार
Challenging the order dated 08.12.2011 of the Director of Income-tax (Exemption),Mumbai, assessee-trust has raised following Grounds of Appeal:
1. The learned Officer, Director of Income Tax,(Exemption), Mumbai erred in cancelling registration u/s 12A.
2. The appellant craves leave to add, alter, delete and /or modify all or any of the above grounds of appeal at the time of hearing.
2.The assessee,a public charitable trust,was registered u/s.12A of the Act, on 6.3.2004.It filed its return of income for A.Y. 2009-10 on 29th September 2009 declaring total income at Rs. Nil.The Director of Income-tax (Exemption),Mumbai(DIT-E),received a proposal from the ADIT (E)-II (1),Mumbai for cancellation of registration granted to the assessee on the ground that the it was carrying on activities in the nature of trade,commerce or business, etc.Accordingly,vide show cause notice,dated 3.11.2011,the assessee trust was asked as to why the registration granted to it should not be withdrawn by invoking the provisions of section 12AA(3) of the Act as the income earned by it by holding seminar of Rs. 3,04,88,920/- was in respect of the activities in the nature of trade,commerce and business.After considering the submissions of the assessee trust,the DIT (E) held that the amount received by the trust by holding seminar was in the nature of nature of trade,commerce or business,that the activities of the assessee-trust were not carried out for charitable purpose within the meaning of section 2(15) of the Act,that the activities of the trust were covered by the proviso to section 2(15),that the trust itself had becomes non-genuine for the section 11 of the Act,that the receipts shown by the assessee in its income & expenditure account from arranging seminars at Rs.3,04, 88,920/-made it amply clear that the trust was doing regular 2 ITA No.1212/Mum/2012 Internate and Mobile Association of India activities which were in the nature of business,that by collecting money in the name of awareness programmes through Seminars it was systematically generating its income,that the true nature of the activities was purely business and same was incidental to achievements of its objects,that same had no relevance as the proviso to section 2(15) got attracted.Vide his order passed u/s.12AA(3) of the Act dated 08.12.2011,cancelled the registration granted to the assessee-trust
3.Before us Authorised Representative(AR)argued that the DIT(E) could cancel the registration granted u/s.12A of the Act by invoking the provisions of section 12AA(3) of the Act only if he was satisfied that the activities of the trust were not genuine or the activities of the trust were not being carried out in accordance with the objects of the trust,that section 12AA(3) of the Act did not authorise the DIT(E) to cancel registration u/s.12A,if he was of the opinion that the activities of the assessee trust involved the carrying on of any activity in the nature of trade,commerce or business,that DIT(E) had failed to bring out any fact that the activities of the assessee trust were not genuine or were not carried out as per the objects of the trust,that the assessee was holding seminars solely for achieving and fulfilling the objects of the trust of parting with information and knowledge in respect of internet and its usage,that the activity of holding seminar was not in the nature of trade,commerce or business,that the seminars were held for attainment of the main objects of the trust,that out of the gross receipt(Rs.3,04,88,921/-);received by the assessee during the year under appeal;the major receipt was in the form of membership fees(Rs.1,90, 99,691/-), that there was a deficit of Rs.28,60,953/-on holding seminars,that it had not earned any income from conducting seminars on the various subjects on Internet and Mobile,that it was not carrying on any activity in the nature of trade/commerce/business or any activity of rendering any services in relation to any trade, commerce or business for a cess or a fee or any other consideration.
He relied upon the cases of M/s.The Bombay Presidency Golf Club Ltd.(149TTJ471),Agra Deve - lopment Authority(141ITD 336),Chaturvedi Har Prasad Educational (134 TTJ781),Bharat Jyoti (142TTJ 800),Sarvodayallakkiya(343ITR300),Ahmedabad Urban Development Authority (ITA 754/Ahd/ 2010, A.Y. 2009-010 date21.05.2010,Electronics Mfrs.Association(31 SOT 346)Indian Electrical & Electronics Mfrs.Association(ITA/5780/Mum/2011),Jodhpur Chartered Accountants Society(258ITR548).Departmental Representative supported the order of the DIT (E)and stated that activities of conducting seminar was a business activity.
4.We have heard the rival submissions and perused the material before us.We are aware that because of amendment to section 2(15)w.e.f.01.04.2009 certain changes have been brought about the trusts and in the definition of the phrase charitable activities.Similarly,certain changes had occurred in the statute when power was given to the departmental authorities to cancel the registr
-ation as per the provisions of section 12AA(3)of the Act.We find that the Explanatory Notes to the provisions of the Finance Act,2010(Circular No.1/2011[F.No.142/l/2011-SO(TPL)-I,dated 6-4- 2011) has explained the background for bringing change in the section as under:
"7.Cancellation of registration obtained under section 12A 7.1.Section 12AA provides the procedure relating to registration of a trust or institution engaged in charitable activities.Section 12AA(3)previously provided that if the activities of the trust or institution are found to be non-genuine or its activities are not in accordance with the objects for which such trust or institution was established,the registration granted under section 12AA can be cancelled by the Commissioner after providing the trust or institution an opportunity of being heard.
3 ITA No.1212/Mum/2012 Internate and Mobile Association of India 7.2.The power of cancellation of registration is inherent and flows from the authority of granting registration.However,judicial rulings in some cases have held that the Commissioner does not have the power to cancel the registration which was obtained earlier by any trust or institution under provisions of section 12A as it is not specifically mentioned in section 12AA. 7.3.Therefore,section 12AA has been amended to provide that the Commissioner can also cancel the registration obtained under section 12A as it stood before amendment by Finance (No.2) Act,1996.
7.4.Applicability-This amendment has been made applicable with effect from 1st June, 2010 and shall accordingly apply for assessment year2011-12 and subsequent assessment years."
From the above it is clear that DIT(E)can cancel the registration granted to a trust if the activities of the trust or institution are found to be non-genuine or its activities are not in accordance with the objects for which such trust or institution was established.In the case of Sarvodaya Ilakkiya Pannaj(supra)the Hon'ble Madras High Court took a view that once a registration u/s. 12A of the Act was granted, the same could be cancelled only on satisfaction of two conditions laid down in section 12AA(3) of the Act, viz.,(a) that the activities of the trust or institution are not genuine; and (b) that the activities of the trust or institution are not being carried out in accordance with the objects of the trust or institution.The Hon'ble High Court expressed the view that there must be specific findings with regard to the aforesaid two conditions.We find that the DIT(E) has not given specific finding as required by the Hon'ble Madras High Court.Holding of seminars cannot be termed a commercial or business activity in the case under appeal,as the trust was established for this specific purpose.DIT(E)has ignored the fact the trust had suffered loss by arranging seminars.Circular issued by the CBDT on 06.04.2011 clearly mentions that amendment would be applicable from the AY.2011-12 and subsequent assessment years.In the case of Agra Developm - ent Authority(supra).In that matter the assessee was granted registration under section 12A of the Act w.e.f. 01.04.2003 and vide order dated 24.09.2003,said registration was cancelled by the CIT by the impugned order dated 04.04.2012 w.e.f.2009-10.Deciding the appeal Tribunal held as under:
From the conjoint reading of sub-section (1) clause (b) and sub-section (3) of section 12AA,it would be seen that the cancellation of the registration was provided where the registration was granted under clause (b) of sub-section (1). Further cancellation under sub-section (3) was also provided where the registration was obtained at any time under section 12A [may be under clause
(a) or clause (aa) of sub-section (1) of section 12A]. But this power of cancellation of registration obtained under section 12A came to be incorporated by way of amendment introduced by the Finance Act, 2010 with effect from 01.06.2010. That being the interpretation of sub-section (3), it is amply clear that the power to cancel the registration once granted was only confined to the registration granted under clause (b) of sub-section (1) of section 12AA till before 01.06.2010. Of course, now with effect from 01.06.2010, the power vests with the Commissioner even to cancel the registration granted under any of the clauses of sub-section (1) of section 12A......Section 12AA(3) of the Act empowers the CIT to cancel such registration if he satisfy that activities of the trust or institutions are not genuine or are not being carried out in accordance with objects of the trust or institution as the case may be. The combined reading of both the sections makes it clear that before 01.06.2010 registration can be cancelled only on those cases where the registration has been granted under section 12AA(1)(b) of the Act.Before 01.06.2010 this section 12AA(3) nowhere empowers the CIT to cancel or withdraw registration under section 12A of the Act. In absence of such power,the registration granted under section 12A cannot be withdrawn or cancelled before 1.6.2010. The power of cancellation of registration under section 12A of the Act came to be incorporated by way of amendment introduced by Finance Act 2010 w.e.f. 01.06.2010. The C.B.D.T. Circular No.1/2011 dated 06.04.2011 explains that this amendment will apply for A.Y. 2011-12 and subsequent years. Whereas, in the case under consideration, the CIT cancelled 4 ITA No.1212/Mum/2012 Internate and Mobile Association of India registration under section 12A of the Act for A.Y. 2009-10 which is not in accordance with the law."
Facts of the case under consideration,are almost similar to the facts of the matter of Agra Development Authority(supra). Agra Development Authority(supra).In this case registration was granted in 2004 and was withdrawn for the AY.2009-10 i.e. before the AY. 2011-12.As the cancellation is against the provisions of law,so same cannot be endorsed.Allowing the appeal of the assessee,effective ground of appeal raised by it is decided in its favour.
As a result,assessee's appeal stands allowed.
फलतः िनधा[ǐरती कȧ अपील मंजूर कȧ जाती है Order pronounced in the open court on 28th May,2014.
आदे श कȧ घोषणा खुले Ûयायालय मɅ Ǒदनांक 28 मई,2014 को कȧ गई ।
Sd/- Sd/-
एच.एल
एच एल.कारवा
(एच एल कारवा / H.L.KARWA) (राजेÛि /RAJENDRA)
अÚय¢ / PRESIDENT लेखा सदःय/ACCOUNTANT
सदःय MEMBER
मुंबई/Mumbai,Ǒदनांक/Date: 28.05.2014
SK
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. Assessee /अपीलाथȸ 2. Respondent /ू×यथȸ
3. The concerned CIT (A) /संबƨ अपीलीय आयकर आयुƠ, 4.The concerned CIT /संबƨ आयकर आयुƠ
5. DR "I" Bench, ITAT, Mumbai /ǒवभागीय ूितिनिध आई खंडपीठ,आ.अ.Ûयाया.मुब ं ई
6. Guard File/गाड[ फाईल स×याǒपत ूित //True Copy// आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai